BSE to shift firms from 'Z' to 'B' group for better price discovery
The Bombay Stock Exchange (BSE) has decided to transfer companies in the ‘Z’ group to the ‘B’ group after ensuring compliance with various norms.
Currently, the ‘Z’ group has 1,686 companies but only 124 of them are active. BSE had announced criteria for such transfers on December 17 last year. The intention behind the change is to remove confusion of investors and better price discovery when suspension of a company in the ‘Z’ group is revoked, said a spokesperson for BSE.
Many of the companies in this group on BSE trade as normal firms on other exchanges. This creates confusion among investors. There is no circuit filter for ‘Z’ group companies when they are relisted or in case of resumption of trading after revocation of suspension. Hence, there are chances of dramatic movements in such scrips. Removal of these stocks from the ‘Z’ group will result in better price discovery and smooth trading in such cases, explained a BSE official.
This decision of BSE will not apply to all ‘Z’ group companies automatically as the exchange will first issue them notices to ensure compliance and then only they will be transferred to the ‘B’ group. The exchange has already initiated the exercise and recently it has transferred from the ‘Z’ group six companies to the ‘B’ group and 55 others to the ‘T’ group. It has also issued compliance notices to 386 companies. More than 1,200 companies in the ‘Z’ group are still under suspension.
| IN RECAST MODE | ||
| Group | ActiveScrips | Total |
| A | 200 | 201 |
| B | 2009 | 3390 |
| S | 478 | 496 |
| T | 144 | 261 |
| TS | 26 | 34 |
| Z | 124 | 1686 |
| Total | 2981 | 6068 |
BSE had laid down criteria for transferring companies to the ‘Z’ group. Cases in which such transfers were done included non-payment of listing fees and listing-related non-compliance. Companies facing consistent investor complaints and those who have not completed dematerialisation of all shares were also transferred to the ‘Z’ group.
The eligibility criteria for companies in the ‘Z’ group to go back to the ‘B’ group include market lot of one share for trading and settlement of shares in demat on netting basis. Companies will have to complete the process of demat before they are transferred back to the ‘B’ group.
BSE will still have ‘A’, ‘B’, ‘S’, ‘T’ and ‘TS’ groups and companies will fall under these categories based on their liquidity and size, apart from other issues. The ‘Z’ group may cease to exist once all the companies in the group are transferred back to the ‘B’ group.